Amazon vs Google: What’s in store for 2013?

When Amazon and Google first rose to online stardom, no one could’ve predicted that the two would eventually find themselves in each other’s crosshair. Back then, the former was simply known for its e-commerce prowess, while the latter was concentrating on taking down the big guns in the search engine universe – which it did, by the way.

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It’s not that Jeff Bezos didn’t see it coming. A former executive of Amazon, as quoted by Reuters, said that Bezos knew as early as ten years ago that it’d cross path with the search engine giant, as he – being one of the early backers of Google – learned that Mountain View was scanning and digitizing books and product catalogs, which Bezos felt could lead to them treading on Amazon’s territory.

While Google never did monetize its digital endeavor then, Bezos himself ended up using the idea as the inspiration for its Kindle lineup, so the executive said.

Fast forward to the present, those fears have been proven to be not entirely unfounded. The rivalry between the two giants may not be as exciting as the many headlines that Apple vs Google generates, but things are expected to escalate in 2013.

Here’s a quick look on the areas that Amazon and Google are going head to head.

Amazing advertising

Google is doing a phenomenal job with its ads business, as it raked in more revenues than the combined takings of all print media in the United States. Not so quietly, Amazon has been building a competitor to Google AdSense, which according to reports will be launched in Q1 2013.

Amazon may not have the luxury of a massive search database like Google, but all those product searches you’re doing on Amazon won’t go to waste. The platform that the online retailer is introducing soon will have targeted ads for shoppers based on their browsing and shopping habits. Amazon has a complete data on what products people are actually spending their money on – also known as conversion data.

In the words of Mark Grether, COO of audience buying company Xaxis: “They know what you just bought, and they also know what you are right now trying to buy.” That’s what makes Amazon more attractive to clients than Google.

The stats are seemingly on Amazon’s side as well. According to the latest study done by research firm Forrester, 30% of online shoppers went straight to Amazon as the starting point of their spending spree, with only 13% said that they began their online shopping ritual by going to Google. This was a reversal of the trend recorded just two short years ago.

At stake for Google are the company’s multi-billion dollar ads-based revenues.

Not so Cloud-y business

The two companies are also looking to one-up each other in the cloud sector. Amazon is clearly in the lead, as it launched its cloud computing business six years ago, but Google is more than eager to shake up the establishment. To a certain extent, Amazon has taken Google’s bait.

Following Google’s decision to cut its cloud storage fees by 20% last month, Amazon followed suit and reduced its fees by 25%. It was Google who made the last move, as it shaved off an additional 10%.

Forbes believes that Amazon will have no problem fending off Google’s attack for the foreseeable future, as the retailer has an edge when it comes to infrastructure, presence, and experience. It can easily play the price game by relying on higher volumes.

Hot hardware

We have to hand it to Amazon, as Jeff Bezos and co was first to release an Android-based tablet – the original Kindle Fire – that managed to challenge Apple’s iPad in the tablet market. In doing so, it has also cut Google out of the loop by introducing its own application store, among other things.

It wasn’t long until Google responded to Amazon’s move. The Nexus 7 tablet, with its great specs and sub-$200 price point, was introduced and launched in the middle of this year to great commercial success. Its popularity also paved the way for an even bigger tab that bears Google’s Nexus branding to enter the market, the Nexus 10 (check out our Nexus 10 review!). Google is following Amazon’s way of selling the hardware cheap and reap the benefits on future purchased content, though one that’s less extreme.

Meanwhile, Amazon has also introduced a plethora of new Kindle Fire tablets this year. They all come with a forked version of Android, yet their owners are locked inside Amazon’s walled garden – at least out of the box. In 2013, we’ll also see Amazon finally entering the smartphone business. According to Foxconn, it’s readying 5 million Amazon-branded phones to be launched in Q2/Q3 2013. It’s a pretty safe bet to make that the phone will come with Android OS inside.

Digital Content

Amazon’s digital storefront has the lead when it comes to movies, TV shows, and music, while Google Play has more e-books and apps. Prices for movie rentals and purchase start at $3.99 and $10.99 on both stores, while a music album typically costs $10.99 – though Amazon seems to have better discount for new releases.

There’s no denying that Google has been aggressively adding more content to its Play Store and making it available in more markets. For example, it has scored deals with almost all major movie studios to bring their classic titles and new box office hits to the Play Store. With the company seemingly looking to digital content sales as a source of revenue, it simply can’t afford to rest on its laurel. Fortunately, things are looking pretty good for Google’s ecosystem next year.

As for Amazon, it will continue to offer added benefits for its Amazon Prime members, providing them with more incentives to stick with Amazon’s content ecosystem and choose Kindle Fire over competing tablets. Oh right, the same users can also access their Amazon content on “pure” Android and Apple devices.

Conclusion

Isn’t competition a neat thing? Not only does it force companies to push the innovation envelope, but it also challenges them to provide better services to users. Whoever comes up on top on each of the category in 2013, it’s us customers who will emerge as the real winners.

What do you think of the growing rivalry between Amazon and Google? Any other category you’d like to add to the discussion? Do you see Amazon grabbing a bigger piece of Android market in 2013?